Sun Minjie is a 28-year-old internet worker who lives in Beijing. Eager to profit from growing demand for the digital currency, Sun has invested more than US$3,000 in a company called 796 Xchange, an online exchange for trading stocks and other financial instruments related to Bitcoin, where initial public offerings are also being held.

He is part of a small but growing group of investors in China who have put the country into contention with the US as the biggest downloader of the virtual money that's being used to buy a growing range of goods and services online. While intensified scrutiny by US regulators casts doubt on the currency's future there, China's Bitcoin industry is expanding.

"What's worrisome is that a lot of people could be just treating it as a speculative investment," said Peter Pak, head of trading of BOCI Securities in Hong Kong. "In China, the stock market, property and bond market are all not so good, so people get really excited when they hear of a new investment that generates high returns."

Sun's outlay of about 28 Bitcoins - around US$3,108 - for more than 400 shares in 796 Xchange has returned 46 per cent since the stock's August 1 debut on the company's own website. The benchmark Shanghai Composite Index has only gained about 2 per cent during the same period.

Bitcoin is similar to other currencies - say, the Mexican peso - except it's not controlled by any government and the total number is capped at about 21 million coins. Computer users can "mine" them by solving mathematical puzzles - uncovering the hidden series of letters and numbers that matches up with security keys specified by the computer programmers who invented Bitcoin in 2009. As more are mined, the puzzles get harder, and therefore more expensive to crack.

Sun turned to shares of Bitcoin companies after initially trying to mine the currency crunching algorithms on souped-up PCs at his office and home. He gave up after a month, concluding that his computers weren't up to the task.

"Simple desktops can no longer dig them up," he said.

There are 11.5 million Bitcoins in circulation, according to Blockchain.info which tracks the virtual currency. At yesterday's price of about US$121, there's still US$1.15 billion to unearth. The inherent scarcity of Bitcoin that was intended to help secure its value has also attracted early investors - Cameron and Tyler Winklevoss, the twins known for their claim to have co-founded Facebook, own about 1 per cent of the currency in issue.

Prices have been volatile, with the value of one Bitcoin varying from US$84 to US$266 in the span of one week in April, according to Tokyo-based Mt Gox, the largest exchange that allows Bitcoin to be traded for dollars, euros and other currencies.

More advanced miners use specially designed gadgets that cost as much as 86 Bitcoins, about US$10,407, in order to mine the digital currency.

Labcoin, managed by Hong Kong-based ITec-Pro, also began trading its shares this month in a virtual market. The seller of virtual-mining equipment had a market value of 15,000 Bitcoins, or about US$1.8 million. Another company that sold shares is Myminer, which operates "mining farms" in China, where it says the low cost of power to run computers gives it an edge. BTC Garden, a Shenzhen-based Bitcoin miner, withdrew its initial public offering this month, citing a dispute with an investor.

This article appeared in the South China Morning Post print edition as Bitcoin spawns virtual IPOs in China